People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 09

February 26, 2012


The 2G Judgement Dismisses

Sibal's No-Loss Argument

Prabir Purkayastha

THE Supreme Court's judgement on 2G of cancelling the 122 licenses awarded in 2008 has blown away the vacuous claims that Sibal, the minister for communications and IT had been making of “no loss”. Sibal had even gone further talking of “gains” that the country has made by giving spectrum at throw away prices. The Court has dismissed this perverted logic of gains and instead held that certain corporate houses made huge windfall profits by securing licenses through Raja's first-cum-first served policy of dirt cheap spectrum and then selling shares of their companies at very high prices. The Court has made clear that all that these companies had for sale of their companies was the spectrum; instead of a public auction by the government, Raja's policies were designed to help companies conduct a private auction of the spectrum.


Of course, the current UPA government is very unhappy with the judgement. It calls into question the much larger policy of gifting natural resources – be it spectrum, land, mineral resources, forests and now even water – to capital. While it is not still clear whether government itself is going to ask the Supreme Court for a review of the two-judge bench verdict, it is already known that it would support the appeal that the private companies are now gearing up to make challenging the judgement.




The Supreme Court's judgement is indeed a landmark one. It has upheld that sale of public property secured through fraud and corrupt practices can be voided. Otherwise, the courts would be condoning fraud. As has widely been noted, this has implications far beyond telecom. Mining is another area where similar arbitrary practice of giving away public property continues. Hundreds of thousands of crores in coal, iron and petroleum/gas reserves have been gifted to the corporate class, all under policies that are equally defective. All these has been a part of the neo-liberal agenda of the earlier NDA and now the UPA governments, where Indian and global capital is being gifted with India's natural resources to help develop Indian capitalism.


The other judgement, that of Justice Saini has let Chidambaram off the hook with regards to criminal conspiracy. It has held that though Chidambaram was a party to the decision on giving spectrum at 2001 prices in 2008, he was merely an innocent victim of Raja and gave his consent without understanding the issues. That Chidambaram has been fully involved as a lawyer in telecom litigation in the country before becoming a minister in the UPA, therefore knew the issues very well and the secretary finance, DS Subba Rao had brought out the issues in his letter to secretary DoT has been  unfortunately overlooked  by the Court.


However, even if we clear Chidambaram of criminal conspiracy as the court has done, two issues still remain. One is that it was squarely Chidamabarm's department that had responsibility regarding the sale of equity which was in reality a sale of spectrum. The Left had written to the UPA at that time that if they did not stop the sale of equity, they should at least impose wind-fall tax on the huge ill-gotten gains of these companies. Neither the PM nor Chidambaram, the then finance minister did anything in this regard. Chidambaram had earlier raised the foreign holding in telecom companies from 49 per cent to 74 per cent in spite of stiff opposition from the Left, which later facilitated these sales. He also provided the sophistry that sale of equity is different from sale of license. The Supreme Court has dismissed this argument and held that in effect the sale of equity was actually a sale of spectrum.


The second count on which Chidambaram is compromised is the policies that the public financial institutions have followed under his regime. Under pressure from the top, they have been forced to give loans to a large number of telecom companies whose licenses have now been cancelled. All that the banks hold as collateral is the license. Thus, public sector banks have huge exposure to the telecom sector and will also suffer the consequence of cancellation of the licenses. Under Chidambaram, the banks have bank-rolled private telecom and power companies, and all at the behest of the finance ministry. Not only licenses but also money has been given by the Indian State to finance private companies.




The issue here is not whether the prime minister or the then finance minister were personally a part of a criminal conspiracy. Both were clearly in the know that a massive scam was under way, and despite this knowledge failed to act to protect the interests of the people. The finance minister as guardian of the country's finances had the power and authority to prevent the scam. So did the PM. That they did not, is an indictment of the then UPA government. And as head of the government, the PM failed in his duty as well.


Sibal had been arguing that Raja committed only some “procedural” lapses on which justice will take its course but had been defending the key elements of Raja's policies – the infamous first-come-first-serve policy of allocating licenses and keeping the license fees in 2008 the same as in 2001. Raja can be sacrificed but not the interests of the capitalist class.  It is only to protect the ill-gotten gains of the corporate houses in the 2G scam that Sibal had been arguing that there is zero-loss.  Any other position would then need an answer on the steps to be taken for recovering the loss. The CPI(M) and the Left had been demanding that it is not enough to have criminal proceedings against Raja; what is required is to recover the huge loss to the exchequer. The Supreme Court has finally now settled this issue – cancelling the licenses that have been given at throw away prices, declaring the policy of first-come-first-serve as illegal and unconstitutional and asking for a fresh auction.


The telecom policy that Sibal has recently made is also a part of legitimising the ills committed under the erstwhile Raja regime. Its short-term intent is to permit sale of spectrum, something that has not been allowed till date. The other part is how to take away from BSNL its huge infrastructure and hand it over to private companies.


Raja had forced BSNL to give its towers and cellular network to private parties under what he called “intra circle roaming”, something that does not exist anywhere else. It allowed  private operators to provide telecom services without any infrastructure under the guise of roaming on other's network, even in the territory for which they have secured the license. Therefore, no need to roll-out a network and meet any obligations which exist under the license. Since no private operator was willing to offer its network to others, Raja had forced BSNL to provide such services to SWAN and Unitech.  Sibal's new policy will not only make this legal, even the land-line network of BSNL can be taken over by private parties by converting it into a “common” infrastructure.


What the UPA lacks is any vision of how to develop the telecom sector in the interests of the people. All that it focuses on is how to help private capital. This is its only mantra.